Little good news for local governments

Jun. 25, 2013

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Townships, cities and counties hoping for increases in some areas of state funding would be out of luck under the final draft of the two-year state budget, and a change to the state’s property tax system would make new levies to make up for the cuts more expensive to taxpayers.

The Local Government Fund would receive $363.6 million in 2013-14, for instance – down from a recent high of $686.7 million in 2010-11.

Municipalities and Democrats had hoped for more money to make up for recent cuts, including lost revenue from taxes on estates, utilities and business equipment.

But General Assembly Republicans and Gov. John Kasich’s office argue the whole state has adjusted from cuts made in 2011 to make up for a projected $8 billion budget shortfall.

Some local governments struggling to operate under new funding levels are considering raising property tax levies. The new state budget would make those increases more expensive.

“Many taxpayers would say that levies shouldn’t be easy to raise,” Senate President Keith Faber, R-Celina, said last week. “We frankly want you (local governments) to operate within your current means.”

In a little-known policy that started in the 1970s, the state currently pays 12.5 percent of all Ohioans’ property tax bills. That practice would continue for existing levies and for requests to renew property taxes at the level homeowners are already paying. But under the budget, property owners would pay the full 100 percent of new or more expensive property taxes, starting with levies on the ballot later this year.

While state money to local governments is falling, the Office of Budget and Management estimates Ohio’s improving economy will boost local government’s overall revenue through 2014 by $1.8 billion, or 3.5 percent. The gains will come through improved property values, higher incomes and more consumer purchases, OBM says, boosting local tax revenue. ■